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New State Law Affects Tax For Shipped Purchases

Posted: 2:02 pm PDT June 27, 2008Updated: 4:28 pm PDT July 13, 2008

If you buy something and have it shipped to your home, you could save some money beginning next week.

But many of you will be paying more.

It's all because of a new state law that takes effect on Tuesday.

The Department of Revenue says starting July 1, the sales tax for shipped or delivered goods will be based on where the customer receives the product -- your home or office -- instead of from where that product is shipped.

Right now, when you shop online, often-times you can duck paying Washington state's sales tax completely.

But this new law will make that more difficult and the Department of Revenue says it will help level the playing field for state brick and mortar businesses.

You can easily find almost anything to buy online these days.

"It's just convenient. It comes to your address," said Anthony Martinez, an Internet shopper.

But now, your address -- not the shipper's -- will determine what you pay in sales tax, thanks to the passage of the Streamlined Sales Tax Law.

The change was necessary for Washington to join a nationwide effort to standardize the way each state taxes goods.

The goal is to encourage out-of-state retailers to begin charging sales tax on sales into Washington and eliminate the unfair advantage those out-of-state businesses have over local brick-and-mortar shops that are required to charge sales tax.

"Let's make it equal. Let the retailers online submit to the state and charge the same sales tax as we do in the store. That way, we are competitive basically dollar for dollar," said Perry Saueressig of Ben Bridge Jewelers.

Each year, according to the Washington State Department of Revenue, more than $800 million in sales tax revenue is lost because of out-of-state purchases.

That's money that could hire more teachers, state troopers and build more roads.

All because catalog and Internet shopping is so simple.

When the new law takes effect on Tuesday for goods that originate in-state, the Department of Revenue says it'll work like this:

Say an Olympia family buys a couch, and that couch is shipped from the retailer's Kent warehouse. The sales tax rate would be the 8.4 percent rate for Olympia, rather than the 9-percent charged in Kent.

That won't save a ton of money, but consumers should know their rate -- especially in these tough economic times.

The Department of Revenue says not all on-line retailers have promised to abide by this Washington state law, only about 1,100 of the many thousands.

And until Congress requires all sellers to abide by the sales taxes in the states where they ship, you won't always be paying sales tax on Internet purchases.

But for in-state items, this new law does apply.

Amy asked which on-line retailers have agreed to charge sales tax.

The Department of Revenue said those names will not be released, but it described most of them as "major retailers."

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